What changed

EXPLANATORY STATEMENT - SUMMARY OF FACTS AND FINDINGS

Follow up to the European Parliament non-legislative resolution on the implementation of the EU-Southern African Development Community (SADC) Economic Partnership Agreement (EPA)

Since the signature of the EU-SADC EPA, the INTA Committee and European Parliament has undertaken the following activities:

Rapporteur: Joachim SCHUSTER (S&D / DE)

- five Monitoring Group Meetings,

Reference numbers: 2023/2065 (INI)/ A9-0024/2024 / P9_TA(2024)0121

- INTA has carried out two missions to monitor the implementation of the EU-SADC EPA, both to South Africa.

Date of adoption of the resolution: 29 February 2024

On 29-31 October 2018, a delegation of seven INTA Members travelled to Pretoria to participate in the EU-South Africa Joint Parliamentary Meeting, but also visited Johannesburg and Cape Town to better assess the implementation of the EU-SADC EPA and bilateral EU-South Africa trade and investment relations.

Competent Parliamentary Committee: Committee on International Trade (INTA)

During the second mission to South Africa on 3-7 April 2023, seven INTA members visited Pretoria, Johannesburg and Cape Town to discuss the implementation of the EU-SADC EPA.

Brief analysis/assessment of the resolution and requests made in it

Since the signature of the EU-SADC EPA, the delegation for relations with South Africa has held a total of 26 inter-parliamentary meetings, covering exchanges on the implementation of the EU-SADC EPA.

The resolution covers the implementation of the Economic Partnership Agreement (EPA) between the European Union and its Member States, of the one part, and the members of the Southern African Development Community (SADC) on the other part, which has been provisionally applied since 2016. This is in the context of the ongoing EPA review process, as well as the ongoing ex-post evaluation of the EPA.

Overview of the EU-SADC EPA

The Parliament welcomes the first review process of the EPA launched in November 2021 and invites the Parties to the agreement to consider other issues beyond trade in goods in future reviews in the light of the rendez-vous clauses present in the Agreement. The Parliament expects that the EPA will be adapted to consolidate and deepen the partnership between the EU and SADC States in response to geopolitical changes and the challenges of climate change. On the preparation of the joint monitoring report on the EPA, the Parliament notices that the process is advancing at a slower pace than expected, while acknowledging the capacity constraints faced by SADC EPA States in this regard.

The EU-Southern African Development Community (SADC) Economic Partnership Agreement (EPA) was concluded on June 10, 2016, between the EU and six South African countries. These countries include Botswana, Lesotho, Mozambique, Namibia, South Africa, and Eswatini. It has been provisionally applied since October 10, 2016, as not all EU Member States have ratified the EPA. Mozambique provisionally applied it from February 4, 2018. Angola, a member of SADC region, also participated in the negotiations on the EU-SADC EPA. However, the country did not sign the agreement in 2015. Instead, the parties agreed to include a specific clause on Angola’s accession to the EPA.

Besides, the Parliament stresses the importance of the involvement of civil society and all relevant stakeholders in the implementation and monitoring of the EPA, however noting the limited involvement of these actors during the implementation of the EPA. In particular, the Parliament advocates for a more structured participation of stakeholders with regard to the concrete implementation of all sustainability aspects in the EU-SADC EPA, in particular calls for the establishment of a Domestic Advisory Group.

This agreement holds significance as the first EPA between the EU and an African region. It also stands as the first fully operational regional EPA in Africa, with all partners implementing the tariff cuts outlined in the agreement.

On trade balances, the Parliament welcomes the fact that trade relations between the EU and the SADC EPA States have expanded significantly, both at regional and bilateral levels. SADC EPA States achieved a trade surplus which is seen as a welcome contribution to economic development. Yet, according to the Parliament, desired positive effects on employment, regional cooperation, diversification and modernisation of the economy have not yet reached their potential. As economic diversification and trade in manufactured products have yet to improve, SADC EPA economies remain vulnerable to external market shocks. Except for South Africa (SA), exports are dominated by commodities of little value added. Most SADC EPA States (except SA) primarily trade with each other, with differences in trade patters within SADC and with the EU. Further asymmetrical liberalisation and enhancing the partnership between the SADC countries and the EU can help address these challenges in diversification, resilience and regional integration.

The SADC EPA group of countries does not consist of the entire SADC bloc, but rather members of the Southern African Customs Union (SACU) and Mozambique, with an option for Angola to join in the future. The SADC Regional Economic Community includes 16 member states, with a primary focus on achieving economic development, peace, security, poverty alleviation, and an improved standard of living for the people of Southern Africa through regional integration. These objectives are underpinned by democratic principles and sustainable development, as laid out in the SADC Treaty signed in 1992. Six other SADC members negotiated EPAs with the EU as part of different regional groups in Africa.

In terms of Technical Barriers to Trade (TBT), the SADC EPA aims to promote regional integration and to be a building block of the African Continental Free Trade Area (AfCFTA). However, regional integration is challenged by barriers, especially related to cross-border issues. Therefore, the Parliament calls on the Parties to increase cooperation in infrastructure, digital trade and certification including under the Global Gateway strategy. Promoting efficient cross-border infrastructure and harmonised regulations procedures related to customs and transportation shall further improve regional integration. Furthermore, the Parliament sees the necessity to further formalize cross-border work arrangements to promote decent work, respecting workers’ rights contributing to social and economic development.

Negotiations on the EPA started in 2004 and were accompanied by criticism, raising concerns that establishing a free trade framework for goods among nations with varying levels of development and negotiation power could disrupt local production systems, diminish government revenues, and contradict the goal of regional integration.

The Parliament welcomes the announcement of the activation of regional cumulation of Rules of Origin (RoO) by the Southern African Customs Union (SACU) EPA States, as flexible RoO are essential for regional integration. These RoO must also promote further development of the AfCFTA.

The EU-SADC EPA is built upon the principles of the Cotonou Agreement and aims to reduce poverty through a trade partnership, promote regional integration, economic cooperation, and good governance. It includes rules on trade in goods, with asymmetric access favouring SADC EPA States. Sensitive products can be exempted from full liberalization, and safeguards can be applied to protect domestic production and infant industries. The Southern African Customs Union (SACU) provides duty-free and quota-free treatment to a significant portion of EU exports to the region, covering 84.9% of these products. An additional 12.9% of EU exports enjoy partial liberalization, involving reduced tariffs or tariff rate quotas.

The Parliament sees the need to address trade irritants related to Sanitary and Phytosanitary (SPS) standards at an early stage cooperatively through high-level political discussions between the Parties. Moreover, it wishes to be fully informed of any review of SPS requirements and to make sure EU standards are not compromised. SADC States received technical and financial support helping with SPS compliance which should be closely monitored by the Commission.

The EU offers immediate duty-free and quota-free access to goods from Botswana, Lesotho, Mozambique, Namibia, and Eswatini, along with preferential access for 98.7% of goods from South Africa. In return, the SADC EPA States have agreed to gradual tariff liberalization over a period of up to 10 years. Special safeguards and measures were established to protect sensitive products from full liberalization. The SADC EPA States have the authority to increase duties or impose quotas on imports from the EU, particularly in cases where these imports disrupt or pose a significant threat to a particular economic sector or domestic industry.

Governance and fiscal and institutional capacity remain the greatest challenges for the EPA’s effective implementation. Thus, development cooperation and technical and financial assistance from the EU to the EPA partners should help addressing these challenges.

This agreement primarily focuses on trade in goods and does not address trade in services, investment, or other issues such as intellectual property rights, competition, and public procurement. However, there is a provision for negotiating agreements on these matters in the future. The EU-SADC EPA also features a chapter on trade and sustainable development (TSD) covering social, economic, and environmental aspects. Additionally, it includes a chapter on areas of cooperation, defining priorities such as competitiveness enhancement and addressing supply-side constraints.

As the EPA failed, according to the Parliament, in deepening regional value chains and diversifying exports, SADC EPA economies are left vulnerable to external shocks and problems of food sovereignty and poverty reduction remain.

Within the TSD chapter, both parties reaffirm their commitment to promoting international trade in a manner that contributes to the goal of sustainable development (with its pillars economic development, social development, and environmental protection). Furthermore, this chapter includes provisions addressing multilateral environmental and labour standards and agreements. Importantly, the provisions pertaining to international labour and environmental obligations do not fall under any dispute settlement mechanism. Instead, they are only subject to consultations conducted through the Trade and Development Committee (TDC), which was established under the EPA and consists of senior officials from both sides.

As a solution, the services value chain (including e-commerce), as well as other local and specialised added-value chains should be supported by cooperation with the EU, particularly in developing high-quality digital infrastructure.

Angola’s accession

EU Member States should ensure the effective application of the global minimum corporate tax rate of 15% for multinational enterprises emphasizing additional global tax revenues.

Angola, currently classified as a least developed country (LDC) and a participant in the EU Generalised Scheme of Preferences (GSP), benefits from preferential treatment. It falls under the ‘Everything but Arms’ (EBA) scheme, which eliminates tariffs and quotas for all imports of goods from LDCs entering the EU. However, as Angola is set to graduate from its LDC status in February 2024, it will lose its preferential access to the EU market under the EBA scheme. To maintain its unrestricted access to the EU market, Angola submitted an official application to join the EU-SADC EPA in February 2020. Subsequently, in July 2022, the Joint Council approved Angola’s request to initiate accession negotiations.

To improve their food security the Commission should ensure that developing countries fully exercise their rights under the World Trade Organization (WTO) special and differential treatment provisions.

Joint monitoring report and EPA review process

The Parliament also stresses the importance of joint collaborations, substantial funding, technology transfers to advance decarbonisation efforts. At the same time, energy partnerships should also benefit local economic growth, employment and local energy supply in the region. The Parliament reiterates that the green transition holds opportunities for pro poor and inclusive job creation, which should be supported by specific investment in human capital. It notes the potential of decentralised climate partnerships, also on municipal level, to promote climate partnerships and enhance mutual understanding of EU climate initiatives. As SADC EPA States are particularly affected by climate change, the Parliament calls for more cooperation between the Commission and SADC EPA States in developing appropriate early warning systems and coordination to achieve objectives of NDCs.

The EU and SADC are currently preparing a joint monitoring report on the EU-SADC EPA.

The Parliament welcomes cooperation on resilient food systems and food sovereignty within the review process and suggests pushing forward the integration of International Labour Organization (ILO) conventions into this cooperation.

The process started after the final list of monitoring indicators was jointly agreed at the 7th TDC in February 2021. Subsequently, a questionnaire based on these indicators was circulated among all focal points of the SADC EPA States to guide their data collection efforts for the monitoring indicators. However, despite various internal deadlines set by the SADC Secretariat and discussions on the matter at its technical meetings, the SADC EPA States did not provide any input.

The Parliament stresses the need for climate resilient value chains in the agricultural sector using new climate adapted technologies. Agricultural sustainability should be improved through knowledge exchange and sharing of best practices within SADC EPA States as well as through improved access to water and sanitation which is currently impeding sustainable development.

In response, the 8th TDC appointed monitoring coordinators representing both the Commission and the EPA Unit of the SADC Secretariat to work on a draft joint report using EU and international data sources. This was done in parallel with the expected input of national data from the SADC EPA States. It wasn’t until October 2022 that the SADC Secretariat received limited data collection input from Namibia, with no input from any other SADC EPA State.

The Parliament calls to prioritise social and gender issues in the implementation of the EPA by empowering women and young people in the SADC region. EU and the SADC EPA States should achieve this inclusion by enhancing equal access to financial services, other resources and contributing to economic participation.

Subsequently, the Monitoring Coordinators proposed to the 9th TDC that a draft joint report, compiled mainly from EU and international data sources, be circulated to all Parties for comments. This was done in early December 2022 and the SADC EPA States were expected to provide their comments by the end of February 2023.

The Parliament sees the need to scale up green finance and investment to achieve the Sustainable Development Goals (SDGs) of the Agenda 2030 and move forward with the low-carbon and climate-resilient transition of SADC economies. The EU and SADC EPA partners should explore new approaches to green finance including climate adaption finance and other innovative financing possibilities in strategic and innovative sectors. Using its influence, the EU should advocate for improved (climate) financing in international institutions like the World Bank and the International Monetary Fund. Furthermore, the Parliament stresses the need for proactive measures to attract investment in strategic and innovative sectors as well as novel financing instruments for critical public infrastructure. A transparent and predictable legal and fiscal framework is needed to help attracting Foreign Direct Investments (FDI).

The European Commission has launched a comprehensive ex-post evaluation of the EU-SADC EPA, in line with its obligation under the revision clause. It published a draft inception report for this evaluation on 15 May 2023 and a final inception report on 21 June 2023, outlining its objectives, scope and methodological approach. The Commission has contracted a consortium led by BKP Economic Advisors GmbH/SQ Consult B.V to prepare an external evaluation study. The external evaluation study will support the European Commission’s own evaluation of the agreement, and also inform the joint review of the EPA by the Parties. It is planned to finalise the evaluation study by April 2024. The objective of the ex-post evaluation is to assess whether the EPA has delivered the expected results and whether there is scope for improvement in EPA’s functioning that could form the basis for policy recommendations. The evaluation will cover the whole implementation period of the agreement since the start of provisional application in 2016, respectively 2018 (for Mozambique) up to now, also comparing, where appropriate with a pre-Agreement period of five years (i.e. starting in 2011). The Commission points out that in terms of geographic scope the evaluation will primarily cover the parties to the agreement, ‘although some global effects (e.g. climate change) will also be covered’.

Job creation, compliance with human rights and environmental due diligence ensured by robust domestic frameworks should be the goal of these investments. The involvement of local companies should improve investment retention and knowledge transfer. The Parliament further welcomes the introduction of EU programmes such as the Support to Improving the Investment and the Business Environment Programme and calls for additional funding in the next financial period.

The joint participation of non-state actors in monitoring the EPA is opposed by SADC EPA States. The EU proposed organising a joint conference between with SADC on the five-year anniversary of the EPA, but the offer was not taken up by the SADC side. Instead, a trade conference with the participation of business representatives was foreseen.

The Parliament calls for a better coordinated Team Europe approach to investment in infrastructure and economic diversification for resilience and sustainable development. The Parliament urges the expansion of funding of the Global Gateway and other necessary public investments. The Commission and Member States are called on to ensure social dialogue in the process of developing and implementing new Global Gateway projects.

Changing geopolitical context

The Parliament calls on the Commission to support SADC EPA States to strengthen their export capacity and investment capacity while fostering a SME-friendly environment. In this context the Parliament calls for more funding in the next period to boost growth and thereby contribute to job creation and poverty reduction.

Several geopolitical and geo-economic factors shape the context in which the EU-SADC EPA is implemented, including the consequences of the Russia’s war of aggression against Ukraine. The COVID-19 pandemic, an expansion of the BRICS group and Brexit have further highlighted the need for a different approach for relations with the SADC EPA States. At a Civil Society Dialogue meeting on the evaluation of the EU-SADC EPA that took place on 31 May 2023, the Commission’s DG Trade underscored that strategic challenges such as the war in Ukraine, China’s increasing role in Africa or the EU’s need for access to critical raw materials call for continued close trade relations between the EU and Southern Africa.

The Parliament welcomes the Sustainable Investment Facilitation Agreement (SIFA) with Angola and acknowledges its potential to facilitate and attract sustainable investment and its potential contribution to sustainable development. Moreover, the Parliament welcomes Angola’s request to join SADC EPA and calls on the Commission to facilitate the necessary capacity building to overcome implementation capacity shortcomings and commence the negotiation process without further delay.

EU-SADC trade compared to other key trading partners

To ensure a sustainable supply of raw materials for the green, digital and just transition, the Parliament calls for increased cooperation between Commission and SADC EPA States. This also involves promoting responsible mining practices, respecting environmental and human rights standards, and involving local communities.

The EU is the largest trade partner of the SADC EPA region among China, the US, the UK, India, Brazil and Russia, with an increasing trend since the signing of the EPA. Only China has managed to follow this trend, but remains in second place from 2016-2022. The United States and India follow at lower levels. The EU manages to be the most important partner in terms of trade in goods (among the partners mentioned above) for the three largest economies of the SADC EPA States - South Africa, which is by far the largest economy, followed by Mozambique and Namibia. SADC’s main exports to the EU, with the exception of South Africa, are unprocessed agricultural goods and raw materials. It should also be noted, that apart from South Africa, all other SADC EPA States primarily trade with South Africa and other states on the African continent, which emphasises the objective of regional integration.

The Parliament welcomes the strategic partnership with Namibia on renewable hydrogen and critical raw materials, highlighting the need for local infrastructure development. In this context, knowledge sharing platforms and research networks can facilitate exchange of best practices which can be extended to technological cooperation in other fields.

In 2021, the EU was South Africa’s top trading partner, representing 22% of its total trade. South Africa’s exports to the EU were diverse, including agri-food, vehicles, chemicals, and machinery, making up 54% of its exports to the EU. The EU market has been especially beneficial for the agricultural sector. Capital and higher value-added goods account for a larger share of South Africa’s exports to the EU when compared to the rest of the world.

The Parliament calls on the Commission to refrain from trade policy prohibiting developing countries from levying export taxes on raw materials if such taxes are in conformity with WTO rules process, as it is the right of African countries to regulate raw materials in their public interest.

EU-27 also holds the top spot among selected partners in trade in goods with Mozambique. Nevertheless, Mozambique trade in goods with China has more than tripled since 2016 -- from € 0.5 billion to € 1.6 billion in 2022. Equally, trade in goods between Mozambique and India has more than doubled, increasing from € 0.9 billion in 2016 to € 2.2 billion in 2022. In comparison, the increase in EU-Mozambique trade in goods has not been as impressive, up from € 1.7 billion (2016) to € 2.6 billion (2022).

The Parliament notes the original proposal for an Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) waiver for COVID vaccines was supported by the EU. It calls for further discussions on extending flexibilities to therapeutics and diagnostics. The Parliament invites the Commission to suggest a clear policy framework that is in line with the agreed TRIPS flexibilities. Finally, the Parliament welcomes efforts within the EU-South Africa partnership to create vaccine production infrastructure stressing that this must include the production of COVID-19 vaccines.

Namibia’s trade activity reached €16 billion in 2022, growing by a third since the EPA signing in 2016. Its trade with the EU nearly doubled from €1.1 billion to €2 billion. Remarkably, Namibia’s trade with China grew almost ninefold, from €0.3 billion to €2.6 billion, surpassing EU-Namibia trade. In contrast, the United States and India lag far behind, each at €0.6 billion and €0.4 billion.

Response to the requests in the resolution and overview of the actions taken, or intended to be taken, by the Commission

EU-Botswana trade remained stable despite a minor disruption in 2020 due to the pandemic, rebounding in 2022. Unlike other SADC EPA States, China struggled to establish a strong presence in Botswana. Nonetheless, China-Botswana trade quadrupled from €0.1 to €0.4 billion between 2016 and 2022, while EU-Botswana trade fell from €2.6 to €1.8 billion from 2021 to 2022.

The Commission welcomes the resolution of the Parliament on the implementation of the EU-Southern African Development Community (SADC) Economic Partnership Agreement (EPA). It is pleased that the resolution shows support for the consolidation and deepening of trade relations between the EU and SADC EPA States and recognises the EPA’s positive impact in terms of significant expansion of trade relations both at regional and bilateral level, and economic development in SADC EPA States.

Among SADC EPA partners, Eswatini and Lesotho have relatively small trading capacities. Eswatini’s trade reached €4.3 billion in 2022 (up from €2.9 billion in 2016), with China being its major trading partner at €0.3 billion in 2022. EU-Eswatini trade has fluctuated between €0.1 and €0.2 billion since 2016. Lesotho’s trade with the EU rose significantly, reaching €0.3 billion in 2022, while its trade with China remained at €0.1 billion. Trade with other partners like the US, Brazil, Russia, and the UK was minimal. India’s trade with Lesotho reached €0.1 billion only in 2020.

On EPA monitoring and review process, the joint monitoring report, the ex-post evaluation and the joint review will help assessing the impact of the EPA and identify areas where the EPA’s functioning and implementation could be improved. The Commission agrees with the recommendation to work with SADC partners to advance fair, inclusive and sustainable trade (paragraph 1) – in fact the Commission has made it a practice to include on the agenda of the Trade and Development Committee (TDC) meetings a point on Trade and Sustainable Development (TSD). However, achieving results in this area will require stronger readiness from the SADC EPA States to discuss on their policies in this area. The Commission will continue emphasising the importance of such exchanges. In the ongoing ex-post evaluation of the EU-SADC EPA, the Commission is analysing also the economic, environmental and social impact of the agreement on the EU and SADC EPA States. This analysis covers, among others, the UN SDGs, human rights (including labour rights), the commitment of the Paris Agreement, the informal sector, along with the assessment of the agreement on economic diversification, SADC regional integration and the effectiveness of EU development cooperation support, all in line with Parliament’s suggestions (paragraph 1). The Commission also notes that another important point, and very relevant for EU-SADC relations, is that the Samoa Agreement (previously known as the “post-Cotonou Agreement”) – signed in November 2023 and started to be provisionally applied as from 1 January 2024 – further reinforces our cooperation on TSD matters and foresees enhanced involvement of civil society. All SADC EPA States signed the Samoa Agreement, with exception of South Africa, following its decision to leave the Organisation of the African, Caribbean and Pacific States (OACPS).

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

On the EPA review process, the Commission notes the Parliament’s recommendation to consider issues of trade in services, investment, intellectual property rights, competition and public procurement. The ongoing process aims to review the Agreement, as mandated by its Article 116. So far, SADC EPA States have not expressed an interest in broadening the scope of the EPA to services, investment or other ‘new generation’ issues.

on the implementation of the EU-Southern African Development Community (SADC) Economic Partnership Agreement (EPA)

On the involvement of civil society in the implementation and monitoring of the EPA, the Commission fully agrees that active participation of civil society should be promoted (paragraph 2). The Commission is making considerable efforts in this direction, bearing in mind that the SADC EPA does not provide for such a civil society dialogue. The Commission has nevertheless proposed to SADC EPA States a joint platform for non-state actors – in 2020, the Commission presented to SADC EPA States a non-paper on the involvement of non-state actors in the monitoring of the EPA. However, at the 9th TDC meeting in November 2022, SADC EPA States explained that they were not ready for such a joint involvement and would rather rely on their own domestic mechanisms for consulting civil society (the same was confirmed at the 10th TDC meeting in February 2024). The Commission regularly consults EU civil society on implementation of Free Trade Agreements (FTAs). In addition, in the framework of the ex-post EPA evaluation study, the contractor organised several workshops on EPA implementation with local stakeholders in SADC EPA States, in particular civil society and social partners – business and workers representatives - which provided valuable insights into how the EU – SADC EPA is perceived. The Commission will continue to bring up the issue of joint involvement of non-state actors with SADC EPA States. However, the formal establishment of a Domestic Advisory Group, as called for by the Parliament, would require an amendment of the EPA and thus agreement of the SADC EPA States.

(2023/2065(INI))

On the joint monitoring report, the Commission acknowledges that there have been delays in the process, due to capacity issues in SADC EPA States (paragraph 3). Nevertheless, the 1st Joint Monitoring report has now been published based on EU and international data. The Commission will further work with SADC EPA States to streamline the preparations of the next editions of the report. SADC EPA States benefitted from technical assistance throughout 2023 to improve their capacity to collect and analyse data.

The European Parliament,

On trade and flows (paragraphs 8 and 42), the Commission considers that the EPA represents a stable and predictable legal framework to conduct trade and investment and enhances cooperation between the Parties. It is development-oriented, offering asymmetrical market access opening - it consolidates preferential access to the EU market for SADC EPA States, while progressively liberalizing access to SADC EPA States’ markets for EU exporters. The Commission welcomes that the Parliament considers the positive contribution made by EPA to economic development. Indeed, since the provisional application of the EPA in 2016, EU27 imports of goods from SADC have increased by 85% between 2016 and 2022, and its exports, by 29%. The EPA has also reinforced EU-SADC trade relations, as the EU remains SADC countries’ first trading partner, with 20% of its exports of goods and 21% of its imports. When it comes to trade diversification, the Commission stresses that the automotive sector is an example of successful diversification of South African exports and creation of value chains with high value addition. In fact, since 2016, South Africa exports to the EU in this sector increased by 22% and its imports from the EU by 18%. EU exports mainly engines and South Africa exports cars to the EU. Trade in automotive sector reached EUR 9.5 billion in 2022 (17% of overall trade between the EU and South Africa). Besides, the EU remains the most important foreign investor in the region, and the framework offered by the EPA contributed to this trend. The Commission acknowledges that the full potential of the EPA has not yet been reached, especially regarding diversification of SADC economies and regional economic cooperation.

– having regard to the Economic Partnership Agreement between the European Union and its Member States, of the one part, and the SADC EPA States, of the other part,

By opening up new markets and ensuring smooth trade between the parties, the EU-SADC EPA offers opportunities to businesses on both sides, especially small and medium-sized enterprises (paragraph 46). Accordingly, the Commission, together with its Member States and also through the EU delegations, is actively promoting the agreement and awareness of its benefits, along with dedicated programmes to increase investment and export capacities and to improve SADC States’ business climate. The Commission is also promoting the agreement among EU businesses to increase trade and investment opportunities and actively handling trade barriers for EU companies.

– having regard to its resolution of 14 September 2016 on the draft Council decision on the conclusion, on behalf of the European Union, of the Economic Partnership Agreement between the European Union and its Member States, of the one part, and the SADC EPA States, of the other part,

The Commission acknowledges that the EPA also comes with some challenges, similarly to any other trade agreement (paragraph 11). Aware of the presence of trade irritants –in relation to SPS measures in particular – the Commission is in regular dialogue with SADC EPA partners and especially with South Africa on both technical and political level (paragraph 17).

– having regard to its resolution of 6 October 2022 on the outcome of the Commission’s review of the 15-point action plan on trade and sustainable development,

The Commission notes that the Parliament concludes that the EPA has not succeeded in deepening regional value chains in the SADC region (paragraph 22). As the Parliament mentioned, South Africa continues to account for 80% of EU’s trade with SADC EPA States. The EPA provides the necessary tools to enhance regional integration - by foreseeing a regional preference clause and the possibility of regional cumulation for Rules of Origin (RoO). As the Parliament noted, SACU States have recently activated regional cumulation, which should facilitate development of regional value chains (paragraph 16). On the African continental level, the Commission stresses that the African Continental Free Trade Area and EPAs, including the SADC EPA, are mutually reinforcing, as EPAs have allowed the African states to familiarise themselves with the advantages of liberalisation, to enact development-friendly and progressive fiscal policies, to reform and modernise their administrations and to attract foreign capitals, conducive to additional wealth, jobs, value and business creation. All these elements will also support the implementation of the AfCFTA. The Commission believes that the EPAs and bilateral preferential trade with the EU have played an important role as catalysts of overall economic development in the partner countries. Without the EPAs, the attractiveness of the African market to foreign capital as well as the trade creation among EPA countries and regions, and with the rest of Africa, would not be as high as it is now.

– having regard to its resolution of 23 June 2022 on the future of EU-Africa trade relations,

The Commission acknowledges the importance of services sector in fostering economic growth and regional cooperation in partner countries (paragraph 24). The Commission also notes that the rendez-vous clause of the EPA also covers services and investment and these areas might be included in the Agreement in the future if the Parties agree. It should be noted that the EPA is still in provisional application and has not yet been ratified by 15 Member States. For this reason, a substantive deepening of the EPA would not seem appropriate before the EPA is ratified by all Member States. Concerning the implementation of the EPA, the Commission agrees that development cooperation and technical and financial assistance are essential factors, taking into account the different needs of each SADC EPA partner. This will also be the case for Angola when it will join the EPA, in line with the relevant Commission’s impact assessment.

– having regard to its resolution of 25 March 2021 on a new EU-Africa Strategy – a partnership for sustainable and inclusive development,

Each SADC EPA State has drawn up, jointly with the EU, National EPA Implementation Plans (NEIPs). The purpose was to identify necessary steps and measures to fully implement the EPA and maximize the contribution of the EPA to long-term sustainable development. Under the 11th European Development Fund (EDF) 2014-2020, the EU has provided support to the operationalization of the NEIPs with a total of EUR 30 million covering Botswana, Eswatini, Lesotho, Mozambique and Namibia. Under the Development Cooperation Instrument (DCI), EUR10 million have been allocated to South Africa for the same purpose.

– having regard to the Commission communication of 18 February 2021 entitled ‘Trade Policy Review – An Open, Sustainable and Assertive Trade Policy’ (COM(2021)0066),

The Commission has also provided capacity building to SADC EPA States for the implementation of the Rules of Origin, notably, on the implementation of diagonal cumulation by SADC EPA States, which has resulted in the activation of diagonal cumulation by SACU EPA States. Mozambique informed that they may be ready to activate it during the second half of 2024.

– having regard to the Commission communication of 11 December 2019 entitled ‘The European Green Deal’ (COM(2019)0640),

In addition, the Commission recalls the support it has been providing through the 11th EDF’s regional programmes:

– having regard to the Commission staff working document entitled ‘Individual information sheets on implementation of EU Trade Agreements’ (SWD(2022)0730),

- The Tripartite Transport and Transit Facilitation Programme (TTTFP) with EUR 18 million assisted the Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC) and SADC (Tripartite) Member States to harmonize road transport laws, policies, regulations, standards and systems with the aim to facilitate increased trade.

– having regard to the Commission position paper on the Sustainability Impact Assessment in support of trade negotiations with Angola for EU-SADC EPA accession,

- EU-SADC Support to Improving the Investment and the Business Environment in the SADC region (SIBE) (EUR 14 million) supports the implementation of the SADC protocol on investment and finance by improving and harmonising the investment policy framework in the region to facilitate and enhanced integration of financial markets.

– having regard to the UN Framework Convention on Climate Change, including the Paris Agreement of 2015,

- EU- SADC Support to Industrialisation and Productive Sectors in SADC Region (SIPS) (EU contribution: EUR 18 million + EUR 4 million from Germany) supports the development of two regional value chains (leather and pharma), to enhance policy and regulatory environment and improve private sector participation.

– having regard to the United Nations 2030 Agenda for Sustainable Development,

- EU-SADC Trade Facilitation Programme (TFP) (EUR 15 million) aims at facilitating intraregional trade their supports implementation of the SADC Protocols on Trade and Trade in Services and Annexes as well as implementation of EU-SADC EPA. It also addresses customs procedures.

– having regard to the Agreement Establishing the African Continental Free Trade Area,

Under the current Programming exercise (2021-2027) Sub Saharan Africa (SSA) regional Multi-annual Indicative Programme (MIP), ‘Trade and Economic Integration’ continues to be a key regional priority (EUR 630 million). Within this priority we are looking at the complementarity of support for economic integration, AfCFTA and EPA implementation, and programmes are being discussed.

– having regard to the Joint Statement of the 26th EU-South Africa Inter-Parliamentary Meeting, which took place on 31 October and 1 November 2018,

When it comes to infrastructure and transport network, the Commission is aware of difficulties in the SADC EPA States. In this regard, the Global Gateway will support strategic transport corridors and also leverage EU investments towards sustainable infrastructural projects in the SADC region. In context of the 2021-2027 EU programming exercise, the identification and prioritisation of key Strategic Corridors in Africa, and focus on their development, is an opportunity to deepen the Africa-EU partnership from a “policy first” perspective. Strategic Corridors are meant to support territorial development, both rural and urban, through the deployment and maintenance of reliable transport and logistics networks and services, as well as digital and energy-related infrastructure. They are intended to facilitate intra-African and Africa-Europe trade, and improve sustainable, smart, efficient, and safe mobility and connectivity in line with the Sustainable Development Goals between both continents. Strategic Corridors are also supposed to support the development of value chains in Africa that can benefit industries in both Africa and Europe and contribute to development objectives. The EU Member States will act together with the Commission as Team Europe to reach these shared sustainability objectives. The Commission deems its efforts in this regard in line with the Parliament’s calls concerning support to SADC’s cross-border customs procedures, connectivity, transport and sustainability efforts (paragraphs 13, 23, 32 and 43).

– having regard to the SADC Vision 2050,

The Commission agrees on the need to undertake far-reaching joint efforts towards decarbonisation and recognizes that cooperation with partner countries, such as the SADC EPA States, is of fundamental importance for both fighting climate change and promoting sustainable development and foster economic growth (paragraph 29). In this regard, the Commission stresses the importance of the Just Energy Transition Partnership (JETP) with South Africa, signed at COP26 in Glasgow between South Africa and Germany, France, USA, UK, and the EU, pledging USD 8.5 billion to support South Africa to decarbonise and become climate neutral. Under this initiative, the European Investment Bank (EIB) has earmarked EUR 1 billion for South Africa to accelerate an inclusive transition towards a net zero and climate resilient economy, in line with the highest ambitions of South Africa’s Nationally Determined Contribution (NDC). This has now increased to USD 9.3 billion via increases from original members and two new partners joining (Denmark and The Netherlands). The EU is supporting the JETP with grants (EUR 114 million) and loans (EUR 1 billion) from the EIB. This comes on top of the support of EU Member States.

– having regard to the SADC Industrialisation Strategy and Roadmap (2015-2063),

The Commission agrees with the need to assist SADC EPA States in facilitating the implementation of EU environmental policy measures and to ensure dialogue to promote mutual understanding on the objectives and impact of EU environmental and climate initiatives (paragraph 32). The EU has an overall external engagement approach aiming to place EU sustainability measures within a wider, collaborative, international context that responds to the climate emergency in a decisive manner while creating new opportunities for the EU and for its international partners. Particularly for African countries, including the SADC EPA States, the Commission recognises that the continent faces specific challenges. Accordingly, the Commission has been engaging with countries affected by the Carbon Border Adjustment Mechanism and the EU Deforestation Regulation both bilaterally and in multilateral fora. The SADC EPA framework provides a valuable forum for these exchanges and bilateral sessions for discussions were held in the context of the relevant Committees. On the multilateral level, the Commission, on behalf of the EU, has regularly presented both measures to the WTO, including but not exclusively in the framework of the Committee on Trade and Environment and organised several information sessions and workshops since their drafting stages in order to ensure appropriate engagement, transparency and genuine consideration of concerns voiced on the new EU environmental policy requirements. The Commission will continue this dialogue and engagement with its trading partners both at political and technical level.

– having regard to the European Economic and Social Committee’s own-initiative opinion entitled ‘Next Generation Trade and Sustainable Development – Reviewing the 15-point action plan’,

The Commission also agrees that the green transition and the achievement of the goals of the 2030 Agenda for Sustainable Development and the Paris Agreement will require substantial financial resources, both public and private. This is why the Commission will soon launch the Global Gateway flagship initiative “Global Green Bond Initiative” (‘GGBI’), as announced in 2023 by President von der Leyen. This initiative aims at supporting the development of green bond markets in low- and middle-income countries, and to scale up flows of private capital from European but also international and domestic institutional investors towards sustainable projects in partner countries, including in SADC EPA States. Furthermore, in a context of fiscal constraints and limited availability of concessional finance, the Commission mandated a High-Level Expert Group (HLEG) to identify the challenges and concrete actions that could be taken to scale up sustainable finance in low- and middle-income countries. The HLEG is expected to publish its key findings and final recommendations to the Commission in the Spring 2024. The Commission has also launched an expert group on enhancing coordination of EU financial tools, which brings together EU Member States export credit and development finance agencies, alongside EU level financial providers such as the EIB and the European Bank for Reconstruction and Development (EBRD) (paragraphs 40 to 45), with the aim to help deliver on the objectives of the Global Gateway initiative. The Commission agrees on the importance to increase support for investments in Global Gateway priorities, for which different payment modalities have a role to play (paragraph 44).

– having regard to the Ex-post evaluation of the EU-SADC Economic Partnership Agreement – Inception Report of 21 June 2023,

The EU is strongly committed to address food security both at global level and in its regional/bilateral relationships. This is an essential part of its support for the international rules-based order and Agenda 2030. The EU-SADC EPA foresees in favour of SADC partners, the exclusion of sensitive products from liberalisation, long liberalisation periods, flexible rules of origin, and special safeguards and measures for agriculture whose essential purpose is to ensure that their food security is not affected. In the same vein, a great deal of sensitive agri-food products that are crucial for food security are permanently excluded from trade liberalisation. In particular, the EPA itself foresees food security safeguards for SADC partners and the possibility for SADC States (except for South Africa) to introduce temporary customs duties or taxes imposed on or in connection with the exportation of goods. In addition, food security is also discussed regularly within the Agricultural Partnership and the Trade and Development Committee established by the EPA (paragraphs 22 and 28).

– having regard to the meetings of the EU-SADC EPA Trade and Development Committee, in particular its sixth to ninth meetings,

Outside the scope of the EU-SADC EPA, the Commission agrees with the Parliament that the EU-Angola SIFA represents an innovative tool to make it easier to attract and expand investments while integrating environment and labour rights commitments in the EU-Angola relationship (paragraph 51). The Commission agrees that the SIFA complements the EPA to a certain extent, however, underlines that they represent two separate legal instruments with no legal connection between them. For this reason, the Commission does not consider that any adjustment of the EU-Angola SIFA would be necessary after Angola joints the EPA.

– having regard to the 2021 Global Report on Food Crises,

On trade and raw materials, the Commission agrees on the importance to strengthen cooperation through formal forums and strategic partnerships – such as the one concluded with Namibia on renewable hydrogen and critical raw materials (paragraphs 54 and 55). For the EU these partnerships are essential to deliver on the Green Deal ambitions, empowering the green and digital transitions. For our partners, these win-win partnerships of equals offer benefits to ensure that their resources underpin a sustainable, clean and inclusive economic growth and development, enable transformation and economic diversification, as well as local beneficiation and value addition. In this context, the strategic partnerships contribute to the development of industrial projects along the raw materials value chain with capacity to supply to the EU industry and deploy a set of measures aiming to support local infrastructure (energy, roads, ports) that will also benefit local surrounding communities, delivery of training, development of skills and capacity building all while upholding high environmental standards respecting labour and human rights and improving governance. The Commission acknowledges the importance of including all relevant stakeholders, in particular local and indigenous communities, and will continue to support multistakeholder fora such as the European Partnership on Responsible Minerals (EPRM) to foster cooperation.

– having regard to the study of the European Parliament’s Directorate-General for Parliamentary Research Services of ... 2023 entitled ‘EU-Southern African Development Community agreement at year six – a geo-economic perspective’,

The development of science, technology, and innovation (STI) roadmaps tailored to Sustainable Development Goals, such as the initiative underway in Namibia, holds the potential to expedite the integration of hydrogen and renewable energy solutions. By delineating strategic investments in STI, these roadmaps pave the way for advancements in green and digital transitions. On 3 March 2024, the Minerals Security Partnership (MSP) Forum was formally endorsed at the MSP Principals’ meeting in Toronto. The MSP Forum inaugural meeting took place on 5th April in Leuven. The MSP Forum is co-chaired by the US and the EU and has two main components: (1) a project group that will focus on supporting and accelerating individual critical mineral projects and (2) a policy dialogue on a secure, sustainable supply of critical raw materials for the green and digital transition. The “Critical Raw Materials (CRM) Club” announced by the President of the Commission is thus integrated in and becomes a foundational part of the MSP Forum. 5 SADC EPA countries have been invited to the MSP Forum launch as prospective MSP Forum members (Angola, Mozambique, South Africa, Botswana and Namibia). Namibia in fact participated physically in the launching event.

– having regard to Rule 54 of its Rules of Procedure, as well as Article 1(1)(e) of, and Annex 3 to, the decision of the Conference of Presidents of 12 December 2002 on the procedure for granting authorisation to draw up own-initiative reports,

The Commission notes that export taxes constitute barriers to trade. However, The EU – SADC EPA does not contain a ban on export taxes on raw materials (paragraph 57). It contains provisions that allow SADC EPA States to apply export taxes in exceptional circumstances for a limited number of products. This includes, for all SADC EPA States except South Africa, where such measures are required for “specific revenue needs, or where necessary for the protection of infant industries or the environment, or where essential for the prevention or relief of critical general or local shortages of foodstuffs or other products essential to ensure food security”.

– having regard to the opinion of the Committee on Development,

Furthermore, all SADC EPA States can temporarily introduce export taxes on no more than eight products at a time (for a maximum of 12 years to satisfy industrial development needs).

– having regard to the report of the Committee on International Trade (A90000/2023),

The Commission underlines the constructive engagement of the EU in the complex and multifaced discussions on whether to extend the scope of the WTO TRIPS Decision to COVID-19 therapeutics and diagnostics. The Commission notes that, despite considerable efforts of WTO Members, consensus on the extension could not be reached. At the 13th Ministerial Conference, the WTO Members agreed on the need to continue the work of building on the lessons learned from COVID-19 pandemic to create effective solutions in case of future pandemics. The Commission is ready to continue its constructive engagement at the WTO and with the SADC EPA States on these matters. In line with the EU's international obligations for compulsory licensing laid down in the TRIPS Agreement, the Commission has proposed a Regulation on compulsory licensing for crisis management, as part of the ‘Patent Package’ adopted on 27 April 2023. The proposed regulation aims to create, at EU level, an efficient compulsory licensing framework to address EU-relevant crises. The Union compulsory licence will serve as an exceptional tool in crisis times when voluntary agreements do not offer adequate solutions and ensure an appropriate territorial reach of compulsory licensing to cover cross-border supply chains. It will build on the existing system of EU crisis instruments.

A. whereas geopolitical changes have led to the countries of the Global South having a more self-determined role on the world stage;

B. whereas the association of important countries of the Global South in the BRICS (Brazil, Russia, India, China and South Africa) alliance, which is to be expanded by six more countries from 2024 following the decision of the BRICS summit in August 2023, underscores the importance of maintaining cooperation with Global South nations on equal and equitable terms;

C. whereas South Africa plays a prominent role as a bridge-builder between the European Union and the African continent and as a partner in addressing global challenges;

D. whereas the full participation of civil society in implementing and monitoring the EU-SADC EPA is essential for the timely identification of challenges, opportunities and priorities and for monitoring the respective agreed actions;

E. whereas the SADC Vision 2050 is based on three pillars: industrial development and market integration, infrastructure development in support of regional integration, and social and human capital development;

F. whereas the SADC Industrialisation Strategy and Roadmap 2015-2063 identifies three preferred growth paths for resource-based industrialisation in the region: agricultural commodity processing, mineral processing, and industrial and service-based value chains;

G. whereas the COVID-19 pandemic has significantly widened the investment gaps in the SADC EPA States and limited their fiscal space;

H. whereas the low level of local production of health products keeps the region dependent on international production for the procurement of vital health products, including essential vaccines against COVID-19;

EPA monitoring and review process

1. Welcomes the first review process launched in November 2021 after the EPA had been provisionally applied since 2016 and expects it to be able to demonstrate the link between the EPA and sustainable development;

2. Acknowledges that the preparation of the joint monitoring report on the EPA is advancing at a pace slower than anticipated; acknowledges the capacity constraints faced by SADC EPA States in this regard;

Trade balances

3. Welcomes the fact that trade relations between the EU and the SADC EPA States have expanded significantly with the SADC EPA States being able to achieve a trade surplus; considers that this demonstrates the EPA’s positive contribution to economic development; notes that, with the exception of South Africa, the bulk of SADC EPA States’ exports to the EU involve unprocessed agricultural products and raw materials;

Technical barriers to trade

4. Notes that regional integration is hampered by long waiting times at border crossings, high border costs and inadequate cross-border connectivity; calls on the Commission and the SADC EPA States to increase cooperation in digital trade and certification;

Rules of origin

5. Notes that no agreement has yet been reached on diagonal cumulation; recalls that the introduction of flexible rules of origin is essential for achieving regional integration objectives; stresses that rules of origin must promote the objectives of the African Continental Free Trade Area;

Trade disputes and market access issues

6. Notes that trade irritants have occurred in relation to sanitary and phytosanitary (SPS) measures, in particular for poultry and citrus fruits; calls on the Commission and the SADC EPA States to use the forums and cooperation mechanisms agreed under the EPA to address changes in regulations and problems related to SPS measures at an early stage and in a cooperative atmosphere so that appropriate action can be taken in a timely manner;

Capacity building

7. Notes that governance and fiscal and institutional capacity remain the greatest challenges for the EPA’s effective implementation;

8. Calls on the Commission and the Member States to step up their efforts in technical assistance; calls on the Commission to significantly expand its communication and cooperation with SADC EPA States and to provide them with timely support in implementing upcoming EU projects and fulfilling other international commitments;

Value chains

9. Concludes that the EPA has not succeeded in deepening regional value chains in and between SADC EPA States to any significant extent; does not consider the EPA to have substantially contributed to the promotion of food sovereignty and poverty reduction in the SADC EPA States;

Climate and food security

10. Stresses that the SADC EPA States are particularly affected by the impacts of climate change; recalls that agriculture in Southern Africa is affected by both floods and droughts; urges the Commission and the SADC EPA States to intensify their cooperation in developing appropriate early warning systems and coordination between the relevant ministries of the SADC EPA States in order to achieve the objectives of the Nationally Determined Contributions;

11. Welcomes the efforts of the SADC EPA States and the Commission to establish closer cooperation on resilient food systems and food sovereignty within the review process;

12. Stresses that there is an urgent need to undertake far-reaching joint efforts towards decarbonisation;

Investment

13. Points out that green finance and investments need to be significantly scaled up in order to achieve the goals of the 2030 Agenda for Sustainable Development and the Paris Agreement and to advance the transition to a low-carbon and climate-resilient economy in the SADC EPA States;

14. Notes that the investment stock of EU Member States in the SADC EPA States remains significantly higher than that of the United States or China;

15. Considers that there is an urgent need to increase sustainable investment in the SADC region and expects investment areas to be identified that appear particularly suitable for investment partnerships between the EU and the SADC EPA States; calls for a better coordinated Team Europe approach in identifying and implementing suitable measures to increase investment;

16. Stresses that a transparent and predictable legal and fiscal framework will help promote regional integration and attract foreign direct investment;

Raw materials

17. Calls on the Commission and the SADC EPA States to strengthen cooperation through formal forums in order to ensure a diversified and sustainable supply of key raw materials for the green and digital transformation, improve recycling of natural resources and promote responsible mining practices; calls for the continuous and broad participation of all relevant stakeholders;

TRIPS waiver

18. Notes that the initial EU policy in connection with the demand by, inter alia, India and South Africa for the removal of patent protection for COVID vaccines has led to considerable disagreement with South Africa; stresses that this form of cooperation does not meet the requirements of an equal partnership; calls for the EU and its Member States to work towards an agreement to extend the waiver to therapeutics and diagnostics;

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19. Instructs its President to forward this resolution to the Council, the Commission and the governments and parliaments of the SADC EPA States.